FTX Ex-CEO Sam Bankman-Fried Arrested in the Bahamas
Moneylife Digital Team/ IANS 13 December 2022
Sam Bankman-Fried (SBF), the former chief executive officer (CEO) of bankrupt crypto exchange FTX, has been arrested in the Bahamas, as he was expected to testify online before the US House Financial Services Committee on Tuesday. Following his arrest in the Bahamas, US authorities on Tuesday officially charged Mr Bankman-Fried with defrauding equity investors.
 
According to the US Securities and Exchange Commission (SEC) complaint, since 2019, FTX raised more than US$1.8bn (billion) from equity investors, including approximately US$1.1bn from approximately 90 US-based investors.

The SEC report said that Mr Bankman-Fried promoted FTX as a safe, responsible crypto asset trading platform, specifically mentioning the platform's sophisticated, automated risk measures to the investors.
 
The US Attorney for the Southern District of New York (SDNY), Damian Williams, confirmed the arrest on Twitter, saying that Bahamian authorities arrested SBF at the request of the US government, based on a sealed indictment filed by the SDNY.
 
"We expect to move to unseal the indictment in the morning and will have more to say at that time," he posted on Tuesday.
 
John J Ray III, who took over as the new CEO of FTX, has said that never in his career has he "seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here."
 
In a statement from the Attorney General of The Bahamas, Sen Ryan Pinder KC, "SBF's arrest followed receipt of formal notification from the US that it has filed criminal charges against SBF and is likely to request his extradition."
 
"As a result of the notification received and the material provided therewith, it was deemed appropriate for the Attorney General to seek BF's arrest and hold him in custody pursuant to our nation's Extradition Act," said the statement.
 
According to a report from The New York Times the charges against Mr Bankman-Fried included conspiracy to commit wire fraud and securities fraud, as well as standalone charges of securities fraud, wire fraud and money laundering.

In a statement, Gurbir Grewal, enforcement director, says the SEC has initiated a separate set of charges against Bankman-Fried, relating to "violations of our securities laws, which will be filed publicly tomorrow in the Southern District of New York."

The charges could land Mr Bankman-Fried in prison for decades, legal experts told CNBC. But before he ever serves time, US prosecutors have to secure his extradition from the Bahamas back to New York.

The US and the Bahamas have had an extradition treaty in place since 1931, with the most recent iteration codified in 1990. "Because Mr Bankman-Fried has not been convicted in the Bahamas yet, US prosecutors had to secure an arrest warrant and provide sufficient evidence to the Bahamians that he had committed a crime," CNBC says.

Beyond the criminal charges set to be unveiled Tuesday morning, the report says, Mr Bankman-Fried is also facing civil action, which could be brought by the SEC, the Commodity Futures Trading Commission and state banking and securities regulators.
 
In the wake of the collapse of crypto exchange FTX, the US SEC has directed publicly-traded companies to tell investors about their involvement with struggling cryptocurrency firms.
 
FTX filed for bankruptcy last month after its possible merger with leading crypto exchange Binance did not materialise.
 
The US House Financial Services Committee is probing the controversial collapse of the crypto exchange that wiped out billions of investors' money.
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